I still don't understand escrows

[Ghel]

For the third time, I'm running escrow analysis. That's when we re-calculate customers' loan payments to make sure the escrow portion of their payments are enough to pay their property taxes and insurance when they're due. The mainframe does these calculations automatically, but then I have to follow up, updating automatic payments, manually processing refunds where warranted, etc.

We have about 400 customers who escrow (it's optional), so the bank decided it's a one-person job. Yay. I have a coworker help with stuffing statements in envelopes, but other than that it's all me.

Anyway, I'm in the middle of sending refunds right now. Here's a customer who is getting a refund of about $90, but their payment is going up about $12 a month. Why doesn't it keep the $90 and only increase their payment $4.50 a month? It must have calculated that the account would be short at some point in the year when we needed to pay out for property taxes or insurance. The calculation is so arcane, so inscrutable. I don't think I'll ever truly understand it.

[csquared]

I'll bet that the system calculates refunds before recalculating payment.

Manglement probably insisted on that.

[Ironclad Alibi]

Here's a customer who is getting a refund of about $90, but their payment is going up about $12 a month. Why doesn't it keep the $90 and only increase their payment $4.50 a month?

If you increase the payment by $4.50 a month the customer might get upset at having to pay more.

But increase the payment $12.00 and month and give them a $90.00 refund, They ignore the increase and are happy they got a refund.

The same rationale works for tax refunds.